Fracking or hydraulic fracturing is a technique for oil and gas extraction. The technique has become popular recently after scientists discovered new ways of extraction without disturbing the bed of shale rocks. After embracing shale gas the US energy market has turned from deficit to surplus . Infact China and Russia are estimated to hold even larger shale reserves than US. India , on the other hand has been deferring from entering this market considering the multi-faceted issues confronted due to the oil gas extraction in the major countries of the world. Unlike US, where private players are also exploring, in India only the national (public) players ONGC and OIL have been given the right to explore the shale resources. Australian exploration firm Oilex has started its operation in the Gulf of Cambay . The Indian shale reserves are primarily in Gujarat and eastern states including West Bengal. India has benefited from the growing demand of Gaur plant (bean) grown primarily in Rajasthan, since it is a vital ingredient used to thicken the water and take the ingredients to ground. Due to increased speculation, Guar Gum futures trading was banned in India for a while.
Countries like France and Germany have banned fracking due to its environmental impact. In the past , The Deepwater Horizon Spill in the Gulf of Mexico caused BP over $40bn along with the reputational impact to the company.
Due to the high potential risks faced by energy companies ,insurance is a key risk management tool. The environmental insurance remains as the low likelihood and high significance cover. Insurers can be very selective in the risks they cover, and the claims due to fracking operations are generally excluded from the Environment Impairment Liability policy or the general liability policy. There have been many coverage disputes in the past for Fracking liability. In future we can expect Cat bonds to be set up to cover the fracking risks. The future of Shale gas is quite debatable. As time unfolds, it will be revealed whether Shale gas is a bane or a boon !!
Read More
http://www.ambest.com/directories/bestconnect/NelsenFrackingArticle.pdf
http://blog.thomsonreuters.com/index.php/qa-fracking-insurance-attorney-michael-m-salem/
http://www.bloomberg.com/news/2013-05-14/india-resumes-futures-trading-in-guar-gum-as-crop-reaches-record.html
http://www.wsj.com/articles/germany-bans-fracking-1404763231
http://www.dailykos.com/story/2013/04/11/1200893/-Fracking-Resumes-Less-Than-a-Month-After-200-000-Gallon-Spill#
http://www.huffingtonpost.com/2011/08/22/halliburton-executive-drinks-fracking-fluid_n_933621.html?
